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EMC, Symantec to enter Software as a Service market

Beth Pariseau, News Writer

During EMC Corp.'s first-quarter earnings call this morning, CEO Joe Tucci let the cat out of the bag that EMC has plans to release a Software as a Service (SaaS) offering in the storage space

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soon.

Tucci mentioned the plans during a discussion on the call about EMC targeting new markets and indicated areas where the company has already moved into, such as data security and server virtualization. SaaS was listed among the hot markets, and Tucci told listeners to "stay tuned" for products in this area.

One Wall Street analyst asked Tucci pointedly during the Q&A if this would mean further acquisitions, a subject on which Tucci was coy. "How much we'll develop ourselves or with our partners, and how much of this we'll 'jump start' by doing a small acquisition, we still want to keep to ourselves right now," he said.

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However, Tucci also indicated that the products would be in the data backup and archiving space. "We'll have another alternative there for our customers, hosted on our premises," he said.

SaaS has begun to take off in storage as large Web companies, like Yahoo Inc. and Google Inc., step into the enterprise storage space, and it's growing clear that traditional storage players are reaching for their slice of the pie. In a separate announcement today, Symantec Corp. announced Symantec Protection Network, a software as a service (SaaS) platform aimed at small and midsized businesses (SMB). The first SaaS offering from Symantec, Online Backup Service based on Backup Exec, is scheduled to become available later this year.

EMC's earnings solid

EMC also has plans to introduce more low-end storage products, despite the dissolution of its Insignia business unit and languishing of its low-end backup software product, EMC Retrospect. According to Tucci, EMC will be launching hardware/software IP storage area networks (SAN) and all-in-one bundles for SMBs this year.

Since acquiring RSA Security Inc. last June, Tucci said, revenues for that company have increased by 25% each quarter, and for the first quarter its $120 million in revenues represent a 25% increase year over year, if EMC had owned the company in the first quarter of 2006.

VMware Inc. was up 95% year over year to $256 million during the first quarter and places the company's revenue on an annualized run rate of more than $1 billion.

Total consolidated revenue for the first quarter of 2007 was $2.98 billion, 17% higher than the $2.55 billion reported for the first quarter of 2006. Compared with the first quarter of 2006, EMC systems revenue increased 6%, software license and maintenance revenue increased 29% and services revenue grew by 21%. The company saw growth in Smarts, Networker and especially Rainfinity, where officials said growth was "in the triple digits," though a precise number was not given.

"EMC is showing higher operating expenses, primarily on the sales and marketing side, but our bottom-line conclusion is that these results set EMC up well for 2007," Goldman Sacks analysts said in a note to investors.


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